PECORA, FERDINAND

From 1932 to 1934, Ferdinand Pecora (January 6, 1882–December 7, 1971) led an exhaustive investigation that exposed corrupt practices in U.S. financial services, garnered national press coverage, and contributed significantly to New Deal legislation that regulated and reformed the banks and stock exchanges.

A Sicilian immigrant, Pecora grew up in New York City, where he studied to become an Episcopalian priest before turning to the law. Active in Theodore Roosevelt's Progressive Party in 1912, he later joined the Democrats and served as an assistant district attorney for New York County.

Following the stock market crash of 1929, President Herbert Hoover urged congressional Republicans to investigate rumors that Democratic "bear raiders" had profited by driving down the markets. The Senate Banking Committee launched an investigation, but it quickly foundered, unable to substantiate the charges. After dismal performances by its first two counsels, the committee hired Pecora in January 1933 to prepare a final report. Convinced that much more remained to be investigated, Pecora won a brief extension. He assembled several talented lawyers and dispatched them to the National City Bank in New York, where they combed through the bank's records before Pecora called its president, Charles Mitchell, to testify in Washington. Under tough questioning, Mitchell admitted that the bank's security house had unloaded poor stocks onto unsuspecting investors, conceded his own income tax evasion, and resigned as bank president.

Headlines from the Mitchell hearings convinced the incoming Democratic majority on the Banking Committee to let Pecora continue the investigation. The counsel called a long list of prominent financiers to inquire into their questionable banking and brokerage practices. When a circus promoter slipped a midget into the lap of banker J. P. Morgan, Jr., during a brief recess of the committee, widely printed news photographs symbolized the congressional humbling of the mightiest bankers. Pecora's probe put human faces on the economic catastrophe of the Depression and spurred public demands for reform. The hearings' well-documented findings had a direct impact on passage of the Glass-Steagall Banking Act (1933), the Securities Act (1933), the Securities and Exchange Act (1934), and the Public Utilities Holding Company Act (1935).

President Franklin D. Roosevelt appointed Pecora to the Securities and Exchange Commission (SEC) in 1934, but the former investigator was dismayed when a notorious stock trader, Joseph P. Kennedy, became its chairman. Voting mostly in the minority on the SEC, Pecora resigned after six months to accept a seat on the New York Supreme Court. In 1950 he ran unsuccessfully as the Democratic candidate for mayor of New York.

See Also: GLASS-STEAGALL ACT OF 1933; PUBLIC UTILITIES HOLDING COMPANY ACT; SECURITIES REGULATION>.

BIBLIOGRAPHY

Pecora, Ferdinand. Wall Street under Oath. 1939.

Ritchie, Donald A. "The Pecora Wall Street Exposé." In Congress Investigates: A Documented History, edited by Arthur M. Schlesinger, Jr., and Roger Bruns. 1975.

Donald A. Ritchie